Of all the military services facing budget pressure this year, the Army is in the direst of straits. The budget Congress finally passed a month ago will help matters, but the service says it’s still more than $15 billion short of funds in fiscal 2013.

Army senior leaders told the Senate Armed Services Committee Tuesday that the elimination of a continuing resolution and the passage of a formal budget only fixed about one-third of the funding problem they face this year. The sequestration cuts that Congress left in place will force them to find $7.6 billion in savings in the next six months.

On top of that, the Army is short $7.8 billion in its Afghanistan wartime account because of higher-than-expected operating costs.

That’s just the 2013 problem.

A long-term problem

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If sequestration remains in place for the next 10 years, as it is in current law, the Army will have to cut, at a minimum, another 100,000 soldiers beyond the reductions it already has planned, said Gen. Ray Odierno, the Army chief of staff. He said those reductions would have to begin immediately in 2014. Gen. Ray Odierno, chief of staff, Army “And by the time we paid separation benefits for these soldiers, the costs to separate them would exceed the savings garnered,” he said. “The maximum amount we can reduce the force without breaking readiness and including excessive separation costs is somewhere between 15,000 and 20,000 soldiers per year. But this would only save $2 billion per year. So right now, almost the full weight of sequester will again fall on the modernization and readiness accounts, where such drastic cuts will take years to overcome. The net result will be units that are overmanned, unready and unmodernized. The steepness of the sequestration cuts forces us to be unready and hollow.”

Odierno told the Senate he began his career as a young officer in the “hollow” Army of the late 1970s and does not want to leave the service in the same condition. But, he said, that’s the inevitable result under current law.

“We can’t allow this to get away from us in a way that’s going to take us five or 10 years to recover,” he said. “The steepness of these cuts will not allow us to maintain the right balance between end strength, modernization and readiness.”

John McHugh, the secretary of the Army, said the service already has had to make damaging cutbacks to readiness in 2013 — 80 percent of Army units will see degraded levels of training this year.

“The things that we’ve already done will, in some instances, take multiple years to fix, regardless of whether sequestration continues,” he said. “We’re just creating holes that can’t get fixed overnight. For instance, at the Aviation Center of Excellence at Fort Rucker, sequestration will require the reduction of more than 500 training seats. Those don’t just get recreated in a year’s time. To take another example, we’ll only be able to rotate two brigade combat teams through our national training center. All of those other teams will be put back into the queue, and it’s not like they’ll make up that readiness in a six-month period. Those are holes that we’re going to be dealing with for some time even in the best of circumstances. We’re going to be significantly challenged for some time.”

Indiscriminate hits across the board

McHugh and Odierno said the sequestration cuts are too large but, more importantly for the Army, they’re too sudden. They argued that if the spending reductions have to happen, they should be pushed to the “out years” so that the Army has time to plan and make intelligent decisions.

That’s not the way the Army’s making budget cuts right now, partially because of the indiscriminate nature of sequestration. In order to protect current operations in Afghanistan, items like training, readiness and civilian pay are taking an indiscriminate hit.

Odierno said he worries it’s only a matter of time before those decisions create big human capital problems and cause the Army’s most talented people to look for something else to do.

“We’re not quite seeing that yet because the full impact of not having enough money to train our people has not fully hit yet. It’s just beginning,” he said. “But if it continues over a two or three year period, I believe we’ll have some real challenges on our hands in terms of whether people say, ‘This is the best organization in the world and I want to be a part of it.’ They’re going to start questioning that. I think we still have time to make sure we can keep the best people. We have to have predictable budgets that allow us to prove to them that we’re going to have an army that is right-sized, trained and ready when they’re asked to deploy around the world.”

Budgets have been anything but predicable over the last three years. Since 2010, the Defense Department has operated under 12 separate continuing resolutions during various episodes of political paralysis over the federal budget.

Odierno said the decreased operational tempo soldiers will see in the coming years might also contribute to lower retention rates, and that the Army is especially focused on holding on to the mid-grade officers and non-commissioned officers who’ve gained invaluable operational experience in Iraq and Afghanistan.

Unpredictability to whittle away leaders

The Army’s attrition rates are lower than they’ve been in years, Odierno said, but that won’t always be true, especially as the economy improves and private-sector jobs become more alluring to soldiers and Army civilians.

“We’re looking at our new leader development program to help them stay interested so that they can help us decide what we’re going to look like,” he said. “For me, if we can just get some predictability that allows us to put a solid plan together, that’s going to reduce a lot of angst that’s out there in both the civilian and military workforce. They still want to serve. That’s not the issue. But if we continue along this path of unpredictability, it’s going to start to whittle away at our leaders.”

McHugh said he’s especially worried about the corrosive effect that ongoing budget turmoil will have on the Army’s civilian workforce. Just like uniformed soldiers, their training is being cut back. But unlike those soldiers, they’re about to face a 20 percent pay cut over the next several months because of pending unpaid furloughs.

“That comes on top of three years of pay freezes for civilian employees. They’ve been critical to this fight, and their morale is on the downswing,” he said. “There are 50,000 U.S. Army civilians who could walk out the door today with full retirement benefits and another 25,000 who are eligible for early retirement benefits. I’m concerned that if we don’t get this straightened out in a way that we can see at least some straight path forward, they’re going start to walk on us. In their own way, they are absolutely important to this fight as every soldier is.”

Even if Congress reaches an agreement that abolishes sequestration, the Army is facing uncomfortable decisions about drawing down its uniformed end strength because of funding reductions that predate the automatic budget cuts.

The $487 billion in spending reductions Congress agreed to in the first part of the 2011 Budget Control Act already requires the Army to cut 89,000 soldiers over the next five years. For junior members of the service, the service is on track to meet that target through attrition.

But in some officer grades, such as lieutenant colonel and colonel, the Army will need to impose mandatory early retirements. The service plans to convene selection boards to shed roughly 1,200 officers this fall.